Brussels, 17-18/10/2007
{{
I. Introduction}}
The Commission communication from the 27th of June on flexicurity has the merit of opening up the possibility of an in-depth discussion on the way the European labour market is adapting itself to change. This discussion will lead to the adoption of common principles on ‘flexicurity’ by the European Council at the end of this year.
The ETUC identifies this as an important opportunity to promote a concept of ‘flexicurity’ that is labour friendly, balanced and based on the realities of workers on the European labour market. The first part of this resolution defines the ETUC’s agenda of flexicurity. The second part compares the ETUC view with the communication from the Commission and concludes that the communication is focussing mainly on reducing key workers’ rights such as the right to stable jobs and secure contracts. The ETUC resolution concludes by urging the European Council to adopt a balanced and more labour friendly approach to flexicurity.
{{II. Flexible and secure labour markets: The ETUC point of view
1. Thinking flexibility and security together: A secure workforce is good for productivity and competitiveness. }}The idea that Social Europe and competitiveness for business are excluding each other, that flexibility for business and the security of the workforce contradict each other, is a non-starter. For the ETUC, the right starting point is instead to recognise that both business and workers need flexibility as well as security.
Workers need flexibility and autonomy in working time to make work and private life compatible. They need protected mobility to move into better jobs and to back up their negotiating position: Workers that are mobile will not accept to cut wages to ‘subsidize’ jobs that have become outdated because of the failure of the employer to innovate. They also need a flexible work organisation with rotating jobs, multi-skilling and continuous training, to enable them to safeguard jobs by improving innovation and productivity.
Business, at the same time, has a major interest in a secure workforce: Firms need a secure workforce to respond to competitive challenges. In order to compete in the global marketplace, business needs committed, motivated and skilled workers that are open to innovation and more productive techniques. An insecure, casualised, deskilled work force will not contribute to better productivity and quality objectives.
Firms, at the same time, also need workers to be mobile so that workers can better match their skills and competences with new job openings. Workers however will be much more willing to change jobs if they can be sure that the new jobs they are moving into have good upskilling and career prospects, good working conditions and are offering stable contracts. Societies also need to be socially mobile, giving people more chances during their lifetime.
2. ETUC’s key principles on flexible and secure labour markets. It is not enough to simply state that flexibility and security should be seen as mutually supportive. What needs to be done is to make sure that flexibility and security are actually functioning in this way and that there are no trade offs but complementarities between the two principles. To turn security into a basis for flexibility and vice versa, the ETUC puts forward the ten following policy dimensions and orientations:
Ensure good and robust job protection systems: The European labour market needs a good and robust system of job protection. Job protection is not the same as lifetime employment but protects workers from unfair and arbitrary dismissal. It promotes internal flexibility and business competitiveness, by, on the one hand, forging a loyal and motivated workforce and, on the other hand, providing incentives to business to invest in continuous training, innovation and productivity. Job protection also contributes to more secure job mobility by giving workers and trade unions the leverage to negotiate transitional security with the employers.
Undertake ‘smart’ reforms by enlarging and complementing job protection with employment security. Besides ensuring a robust level of job protection, the design of job security systems matters as well. Here, small changes in the design shifting specific accents of these systems can increase their contribution to deliver secured transitions and protected mobility. Here, the importance of advance notification in particular needs to be underlined. Advance notification not only provides dismissed workers with an early warning signal. It also makes it possible for social partners’ funds and public employment services to start immediately with preparing these workers for the search for a new but rewarding job even when they are still working with the old employer.
Put job quality, including the principle that stable and secure open-end contracts, should remain the general form of employment, at the centre of flexicurity. Workers will be more inclined to accept ‘change’ and to move between jobs, firms and sectors if the labour market is mainly build up of quality jobs. Mobility will also be enhanced by the knowledge that the overwhelming majority of jobs offer an interesting and rewarding job as well as a stable and secure work contract. The Laeken indicators on job quality (see Commission communication 2003 on the quality of jobs) are a good basis to develop an agenda of job quality but need however to be enlarged so that they also include the principle of promoting stable, secure and open-ended work contracts as the general rule.
Promote negotiated flexicurity by strong, autonomous and representative social partners. Strong and omni-present trade unions allow collective agreements to strike a balance between flexibility and security without falling in the trap of generalized downwards competition on labour standards. Promoting collective bargaining solutions however entails moving from ‘lip service’ to real policy action. It includes measures to develop the role of social partners in the governance of social welfare systems, to extend collective bargaining (for example collective agreements providing workers with access to training or promoting reconciliation between work and private life) and to respect the autonomy of action of social partners. Given the diversity of industrial relations in Europe, labour law will in many cases need to continue or even increase its role in protecting workers against the power of employers to take away the jobs for their workers. Also, the principle of ‘the rule of law’ needs to be respected as well, implying effective enforcement of EU and national legislation.
{{
Improve social welfare systems by ensuring generous social benefits covering all forms of contracts and work. }} Good unemployment benefit systems make change acceptable to workers by providing an alternative source of income when workers lose their job. They promote mobility by delivering the unemployed the financial means to look for a new job. They function as a ‘job insurance’ mechanism, compensating workers for investment they made in moving to a new job. They improve job matching and the overall efficiency of the economy by ensuring that workers do not have to accept a job below their skills level. Together with educational and re-training policies, they allow workers to redirect their skills so that they are back in line with the needs of a modern economy. They score up the practice of good working standards by providing workers with an immediate alternative to accepting or remaining in jobs with exploitative working conditions. They help preventing, along with other measures, workers getting trapped in ‘bad job traps’ by providing all workers, irrespective of their specific work contract, access to social security and services, including care for the children and the elderly.
{{
Invest in active labour market policies.}} Active labour market policies are crucial to build bridges from one job to another job. In combination with generous benefits, public employment services, retraining programmes, job search assistance constitute a ‘learnfare’ infrastructure that facilitates the transition into another and rewarding job.
Promote lifelong learning. An educated work force with updated skills is a flexible one, both in terms of internal as well as external flexibility. However, statistics show that business invests less and less in the training of its workforce, and this despite the increasing demand for better qualifications. To remedy this every worker should have an annual competencies and qualifications development plan besides the necessary training to ensure that the worker’s competencies and skills are adapted to the changes introduced at the workplace level.
Putting better gender equality into practice. Compared to men, women often find themselves working in more precarious and insecure jobs characterised by excessive flexibility. Legislation, collective agreements, welfare systems and public services all need to be strengthened to fight gender imbalances and discrimination and improve the situation of women in the labour market. {{
}}
Complement flexicurity with a growth and job friendly macro economic policy. A flexible labour market, even when it is a secure one, does not create more jobs. Jobs materialise because business face demand for their products and services. To kick start the process of job-creation, macro-economic policy needs to inject aggregate demand into the economy, so that more jobs become available for a more mobile and/or a more productive workforce. {{
Make available the budgetary resources that are necessary to finance flexicurity.}} Flexicurity policies need to be financed, implying that member states can even less afford the cycles of competitive tax dumping that are regularly occurring in Europe. Coordination of tax policy in particular on these categories of taxes that have a mobile taxation base, is urgent and necessary. Moreover, instead of following an “accountant’s” approach, the implementation of the reformed Stability Pact should provide financial room to implement to allow member states to implement flexicurity.
{{
III. ETUC analysis and evaluation of the Commission Communication
3. The Commission blames ‘job security’ for precarious work…. }}The basic message of the communication is that workers need to give up on the security of their jobs and trade ‘strict’ job protection in for measures promoting so-called employment security. In the Commission’s view, ‘insiders’ with their well protected jobs are responsible for pushing jobseekers – the ‘outsiders’ - into precarious jobs and/or keeping them in long term unemployment, thereby putting the sustainability of social protection systems at risk.
Given this approach, it comes as no surprise that the Commission communication implicitly defines ‘strict’ job security by qualifying the - rather low - level of job protection in Denmark as being ‘moderate’. Indeed, on the OECD Employment Protection Legislation indicator for regular workers Denmark only scores 1,5 on a scale ranging from 0 (no protection) to 6 (maximum protection). By redefining Danish job protection as ‘moderate’ (instead as being ‘low’), the Commission is targeting the majority of job protection systems in Europe, including countries that have high employment rates and are rather successfully in adjusting to change (Sweden, Netherlands, Norway). Only the Anglo-Saxon members (which have even lower job protection levels as Denmark) as well as Belgium and Italy (which have similar levels of job protection for regular workers) would be excluded from the Commission’s drive against ‘strict’ job protection legislation.
4. … and does not propose a satisfactory and credible policy agenda to promote ‘employment security’ Although the communication does stress the importance of policies such as lifelong learning, active labour market policies and benefit systems, a closer look reveals that the approach taken here is a very narrow one. Basically, the Commission is describing a ‘workfare’ and not a ‘learnfare’ approach of getting people as rapidly as possible into another job without having due attention whether these jobs are precarious ones. With the unemployed under more pressure to accept such jobs, employers will be looking to reduce to downgrade the quality of the jobs on offer. The Commission’s workfare approach can be recognized in the following points:
Unemployment benefits are analysed from the point of view that they harm the incentives to accept work and not from the point of view that good benefits make workers secure and accept change. Whereas even the OECD uses the wording of ‘generous’ benefits to describe flexicurity, the Commission instead calls for ‘adequate’ benefits, which for some actually might mean ‘low’ benefits;
The Commission’s view of ‘modern’ social protection systems also seems to be skewed towards measures promoting low productive jobs such as ‘in-work benefits’ and ‘efficient’ job search support;
Active labour market policies are limited to job search help and ‘make work pay’ policies. The dimension of skills for all, retraining the unemployed, advice and guidance, upgrading their skills has been omitted from the communication, although it is one of the centrepieces of the so called Danish ‘learnfare’ model;
On lifelong learning strategies, the communication does contain some positive wording. However, this is subsequently being downplayed by rather peculiar language on the fact that employers currently bear a significant proportion of the costs of on-the-job training and that, in addition to this, workers may also bear some of the costs for example by investing their time. Here, the Commission ignores the structural trend of employers providing their workers with less and less access to training.
5. Assessment of the Commission’s flexicurity principles: not really consistent. The Commission proposes eight flexicurity principles. The ETUC supports several of these such as the principle that rights and responsibilities should be balanced by all actors including business, the fact that flexicurity is not about one single model and that it needs to be adapted to the specific circumstances of Member states, the need to support gender equality, the role of trust and dialogue between governments and social partners.
{{
}}However, the ETUC regrets that the Commission at the same time is proposing other principles that work to undermine the previous ones:
By putting ‘flexible’ contracts as well as sufficiently flexible firing at the heart of the strategy, the Commission is in practice giving priority to the model of ‘external’ flexibility at the expense of other models using ‘internal’ flexicurity to adapt to change;
‘Easy firing’ and ‘flexible’ contracts will make the balance of power shift towards employers, thereby undermining the principle that business should also bear its part of the burden of adjustment as well as reducing business incentives to develop internal flexicurity strategies which are aimed at innovation and higher productivity;
By calling for promoting both ‘external’ as well as ‘internal’ flexibility, the Commission ignores the fact that ‘internal’ flexibility can, for certain countries’ be a valid and more productive alternative to models of ‘easy firing’ and high or excessive contractual diversity. The Commission’s underlying idea seems to be that workers that can be easily fired will be less resisting a flexible work organisation that is then driven by the employers’ needs;
Calling upon social security to be ‘modern’ and ‘active labour market policy to be ‘effective’, together with the statement that ‘social protection needs to support, not inhibit, social protection inject a clear pro-deregulation bias in the Commission guidelines;
In omitting any reference the importance of macro-economic policies in creating more jobs as well as the need to insure sufficient government revenue (including tax revenue from profits) to finance ‘flexicurity’, the Commission’s flexicurity principles are seriously incomplete and risk creating the false impression that flexicurity, in particular low firing regulation, will in its own, create more jobs and provide new revenue for the state. This however is a dangerous illusion. The link between ‘flexicurity’ and general employment performance is not obvious. For flexicurity to work, growth-friendly macro-economic policies are necessary to create the new jobs that match a mobile and productive work force.
6. Extremely worrying flexicurity indicators: indicators are the basis of any strategy and certain indicators have the power to pull the strategy in the one or the other direction. This is why the Commission proposal to include the OECD indicator on job protection is extremely worrying. Not only is this indicator crude, unreliable and incomplete but also its simplistic focus on the level instead of the design of job protection is making the indicator inappropriate in giving a proper picture of the degree to which a certain system of job protection is promoting productive change. It also stands in contrast to European Union legislation giving workers rights to information and consultation in the event of collective dismissals, with the OECD index rewarding countries not applying this basic right.
Another indicator, proposed by the communication, concerns ‘unemployment traps’ or the extent to which unemployed are better off when accepting a job instead of remaining on unemployment benefits. This indicator also presents an incomplete picture of how benefit systems work to influence job matching and is constructed from the assumption that the only effect of unemployment benefits is to reduce the incentive for unemployed to take up jobs.
{{
}}Including these indicators in the flexicurity agenda runs the risk that workers will start to identify the European Employment Strategy as a strategy to lower workers’ rights.
7. ETUC-conclusion: The Commission communication needs major rebalancing. Comparing the ETUC’s approach to flexicurity with the Commission communication shows that they take a totally different orientation. Whereas the ETUC is calling to modulate the design (not the level!) of job protection systems so that employment security measures are added to the security of stable jobs, the communication’s focus is simply on reducing the level of job protection. Whereas the ETUC is promoting secure contractual arrangements as the general form of employment in Europe, the Commission wants ‘flexible and reliable’ contracts. Whereas the ETUC wants to see generous social benefits as a basis for ‘learnfare’ agenda and upwards mobility, the Commission is promoting a ‘workfare’ agenda.
Therefore, the ETUC is of the opinion that the Commission communication is presenting a view on flexicurity that is seriously imbalanced in favour of the interests of business. With the flexicurity agenda as defined by the Commission, business will get the ‘flexibility’ to fire workers at a low cost, while also obtaining the ‘security’ of having at its disposal a work force that is disciplined by ‘workfare’ policies to accept any kind of job, even if this is a precarious one.
This type of flexicurity agenda is not desirable. It will result in an insecure work force unable to engage in the agenda of training and developing high productive workplaces, in rising inequality because the elite of strong ‘insiders’ (CEO’s, managers, supervisors) will capture the wage moderation efforts obtained from regular workers whose bargaining position has deteriorated and, finally, in an economic slowdown because of increased precautionary savings of workers.
{{IV. Conclusions: ETUC calls upon the European Council, European Parliament and Commission to rebalance flexicurity by making it more labour friendly
}}
8. Business and its responsibility need to be brought back into the equation. The ETUC insists upon the Council and the Commission that the flexicurity communication is not balanced and needs substantial change to make it more friendly to workers. What needs to be urgently done is to bring the responsibility of business to develop and implement sustainable labour market practices back into the picture. The root cause of precarious jobs is not that workers are overly protected but that business has been using as well as developing loopholes in labour law by pressing governments with the false and dangerous argument that, for business to invest and create jobs, it needs to be ‘pampered’ by excessive and unlimited flexibility. To fight segmented and two-tier labour markets, labour law needs to strengthened, not weakened further. Modern and stronger labour law means making sure that:
loopholes in labour law which are giving employers the possibility to keep (regular) workers continuously in what were supposed to be temporary and/or exceptional statutes, are closed. This includes measures to end chains of fixed-term employment and forms of ‘sham’ contracts (such as zero hour contracts for example).
all forms of subordinated employment relationships fall within the scope of labour law and offer robust protection, thereby addressing situations of bogus self-employment and abuse of civil law contracts.
a-typical jobs do not function as ‘dead-end’ job ‘traps’ but carry equivalent as well as extended rights to transform precarious jobs into regular work.
9. To do so, the ETUC urges the European Council to undertake the following actions. When defining the common principles for flexicurity, the European Council should:{{
}}Make sure that segmented labour markets are addressed by ensuring upward convergence into stable contracts, not by transforming stable contractual arrangements into an exception instead of being the general principle;
Complement job security with employment security measures;{{
}}Focus on a policy agenda promoting the quality of jobs;{{
}}Strengthen and give more value to collective bargaining practices by strong and representative social partners, fully respecting their autonomy;
Place at the heart of the strategy the promotion of strategic objectives such as a stable employment relationship, the right to collective bargaining and to trade union membership;
Keep into account that there is not a single policy model or solution and that diversity of industrial relation systems in Europe needs to be respected;
Insists on the fact that a flexicurity policy that is mutually supportive can only work if it is accompanied by growth-friendly macro-economic policies and by coordinated tax policies; at the same time, it must fully respect labour law;
Insist on the role that action at the European level plays in setting a level playing field on sustainable labour market practices for business in the European internal market. Here, a European directive on temporary agency workers, ending this particular form of labour force segmentation by implementing the principle of ‘equal pay for equal work’ is the first and most pressing issue that should be taken care of;
Put forward relevant indicators (in the place of indicators measuring the deregulation of job protection and social benefits), focussing on policies that invest in people and their skills, the extent to which workers are caught in ‘bad job’ traps, the level of precarity and insecurity of jobs and contracts and indicators measuring if workers succeed to move up to a better job and/or contractual status;
{{
10. Respect the joint European social partners’ opinion. }}Finally, the ETUC wants to draw special attention of European policy makers to the joint social partners’ analysis on the challenges facing the European labour market where European employers have given their agreement to:
analyse job protection systems from the point of view of ‘design’ (and not from the point of view of ‘level’ of protection); including references to promote stable employment relationships and to complement (not ‘substitute’) job security with employment security measures;
stress the importance of macro-economic policies exploiting the full growth and job potential of the economy;{{
}}recognize the existence of situations of what we call precarious work (involuntary part-time and fixed term work, low wages, low transition rates into better jobs,…);{{
}}underline the importance of social dialogue and autonomous social partners.{{
}}